Interview with Bob Kemp, CEO & Founder of Oaktree Products, Inc.

Bob Kemp

SMAKA: This is Carolyn Smaka, and today I'm speaking with Bob Kemp, CEO and founder of Oaktree Products, Inc. Thanks for taking time to speak with me today, Bob.

KEMP: Thanks for having me, Carolyn.



SMAKA: Bob, you have an interesting background that led to your founding Oaktree Products. Can you talk about that?

KEMP: Sure. Back in college, I majored in microbiology, and while I really enjoyed it, I had no idea what I was going do when I graduated. I didn't really want to teach, or to work in a lab.

At that time, the pharmaceutical companies were looking for science majors that they could then train to become salespeople. Now it's actually the reverse - the pharmaceuticals look for salespeople that they can teach the science to, but back in 1980 when I graduated it was the opposite.

I was fortunate to be hired by a fast growing pharmaceutical company called Marion Laboratories. It was a great fit. I started out in sales and then went into the marketing group in their home office. It was a great experience for me to learn about different aspects of business. While Marion Labs was a multi-billion dollar a year business, I was in the consumer products division, which was a much smaller, entrepreneurial division.

SMAKA: And you liked the entrepreneurial aspect?

KEMP: Yes, I had always had this kind of entrepreneurial bug from the time that I was a little kid. And while I was working at Marion, I was always trying to find a successful business venture that would allow me to eventually go out on my own.

And Oaktree came out of an interesting progression from there. At Marion Labs, I had been working on a product called Debrox, the cerumen softener, which was a product the company had never really focused on. So they decided to give it to me, the junior guy, and they challenged me to grow the business.

And as coincidence would have it, I had a chance meeting with Ross Roeser, believe it or not, on an airplane.

Dr. Roeser, of the Callier Center at UT Dallas and a founding member of the American Academy of Audiology, was really the father of cerumen management. He was instrumental in changing the scope of practice of audiology to include the removal of cerumen. And when I met him he was right in the thick of it, writing position papers and working with AAA to expand the scope of practice. This was 1989 - 1990.

SMAKA: And you met him on an airplane?

KEMP: Yes, we were sitting next to each other on the plane and making small talk. We were talking about what we do, and I said, "I'm the guy behind Debrox." And he started describing cerumen removal and the perspective of the audiologist. And I saw how Debrox could be really important to audiologists who were likely going to be involved in cerumen removal, so when I got back to the office, I hired him as a consultant.

I got to know Ross quite well, and I learned a lot about audiology. It was very interesting to me that from a healthcare standpoint, audiologists were set up to sell products to their patients in order to be more of a full service provider. From the side of the business that I was from, physicians didn't sell anything. They would write a prescription and the pharmacy would sell it. But audiologists had the infrastructure in place to provide hearing aids, batteries, and other products that related to patient care.

And so I put together a plan for Marion Labs to market and sell Debrox to audiologists. Well, my big plan was met with a lot of resistance. They said, "Frankly, we don't want to sell directly to these audiologists. First of all, the ENTs are not going to be happy when they hear that audiologists are doing this. And secondly, our model is not to sell directly to the practitioner, it is to sell to the pharmacy who then sells to the consumer."

But the idea was planted, and I couldn't stop thinking about it. And, about this time the company sold the division I was in to a company in Pittsburgh.

SMAKA: You were living in Cincinnati at the time?

KEMP: Yes, and we didn't want to move to Pittsburgh. I still had the entrepreneurial bug, and this is one of those examples where you're kind of forced to do something that you probably wouldn't have done otherwise. We decided to move back to St. Louis where our families are and we have both a support system and a safety net, and to give my idea a try.



Audiologist's Choice was Oaktree's first product

And the first product we came out with was Audiologist's Choice, which is a direct knock-off of Debrox, and we sold it to audiologists. And the idea worked.

SMAKA: So you started with one product?

KEMP: Yes, but we quickly learned that we needed additional products in order to make a living out of the business. So we added other products almost accidentally.

People would call us and say, "Hey, I want two dozen Audiologist's Choice, and do you by any chance sell _____?" And I would say "Sure" even if we didn't, as I would go out and find it. Fast forward to today, and we distribute approximately 3500 items.

SMAKA: Congratulations - that is a great story! How long did it take to grow the business?

KEMP: Well, Oaktree was founded in 1992, and it was five or six years before we even drew a paycheck. We just added and added products over time. I was talking to somebody the other day that was just starting a business. He was very excited about the fact that within a couple of years he thinks his salary will be back to where it was in the corporate world. I said, "Don't even anticipate that it's going to be a couple years. It's going to take twice as long and cost you twice as much as you think it's going to."

SMAKA: What kept you going during those early years, Bob? Audiology is a relatively small profession comparatively - how did you know that you were going to make it?

KEMP: A few things kept me going. One was my severance from Marion Labs, another was my wife. We scaled back our lifestyle, and she went out and sold real estate. The other thing that kept us going emotionally was that we could see the business was working and that it would take off if we gave it enough time. The concept was good, the business model was valid, and as long as the clock didn't run out on us financially, we were going to make it. Every audiologist I talked to liked the idea, it just took a while to get people to change their habits and buy from us rather than their current supplier. I did a little consulting on the side as well in order to help keep things afloat. Fortunately, just about the time that we ran out of money, we were able to write that first little paycheck.

SMAKA: How did you get people to change their habits? What separates you guys from other companies out there that have some of the same products?

KEMP: That's a really good question. One of the things that I realized early on was that most of the products that I was selling were exactly like someone else's product. Because as I mentioned, people would call us and say "I buy this product from another company - do you have it?" So it became clear that we needed to differentiate ourselves on something other than products. And with my business experience, I also knew that I didn't want to get into a price war as nobody would win.

What I did realize is that as a consumer, I've always had a bug about customer service. It really bothers me as a consumer when companies I do business with don't pay attention to me, because I'm the one forking over the money. I despise bad customer service.

Fortunately for me, when Oaktree was starting out, bad customer service was the norm at many companies. This was probably due to automated phone systems just getting popular. Press one if you want to talk to this, press two, etc.

That technology led to an attitude of, "We really don't need to pay any attention to the customer because frankly we've got technology for that."

This was a great opportunity for us. Solid, personal customer service became the foundation of our business from the very start, and it's still true today. We used to have a saying - we don't want to just make customers happy, we want to delight them. We want the whole customer experience - whether it's online or on the phone - to be one where they think, "Man, I love working with the people at Oaktree, and they are just totally different than every other company we work with".

We revolve our entire business around customer service - not only from the order handling perspective, but also in terms of what we bring to the marketplace.

SMAKA: How so?

KEMP: In terms of our background and expertise as a company. As I mentioned, my background is microbiology, with experience in business, cerumen management, and also infection control. Our Vice President, Dr. A.U. Bankaitis, also has expertise in infection control, as well as in many other areas. Her doctoral work was related to HIV and its effect on hearing. A.U. is an audiologist who is also an incredible speaker, an incredible writer, and has a great mind for business. She's really a one of a kind talent. It's not every day that you find somebody that is as intelligent and book smart as she is, yet has the personality that enables her to be one of the most dynamic speakers I've ever met.



Oaktree's resources includes publishing books, DVDs, and conducting extensive trainings in cerumen management, infection control, hearing assistance technology and other areas related to audiology and hearing aid dispensing.

So we have parlayed our strengths into being a resource to our customers. That resource includes publishing four books on infection control specifically for hearing healthcare providers. A.U. has also conducted training seminars all over the country and online on a variety of topics, and is collaborating with Au.D. programs to provide additional training to the students. We are now a partner with AudiologyOnline in order to make content more readily available through our online classroom in order to help our customers with their businesses. We continue to bring customers answers, solutions and support, in addition to being a resource for products and product-related information.

Our goal is to be a resource for information, for products, for choices. Whatever the case may be, when you call us, you're going to have the answers you need to get through your day.

SMAKA: How did Dr. Bankaitis come to work for Oaktree?

KEMP: I was very familiar with her publications on HIV and infection control, and I had really wanted to meet her. I was in the Denver airport on my way back from the American Academy of Audiology convention and I was talking to some colleagues about infection control. I said, "Yeah, I have to meet this Bankaitis guy. It sounds like he's really got some great ideas about infection control". And it just so happened that A.U. was sitting right there in the chair in front of me and she said, "I'm this Bankaitis guy".

[Laughter]

KEMP: And we hit it off immediately, and we stayed in touch. As Oaktree grew, one thing led to another and we brought her on as a consultant for a strategic planning meeting. After spending three days in the meeting with her, Margy and I offered her a position with the company. That's how much she impressed us. She is awesome.

SMAKA: I may have told you this, but when she presented on infection control on AudiologyOnline last year, all the reviews of her course were outstanding, and more than a few said it was the best course they had ever taken.

Bob, when did infection control become a part of Oaktree?

KEMP: When the scope of practice of audiology was expanded to include cerumen removal, Oaktree was a vendor at the Academy of Doctors of Audiology convention. And my wife and I were also volunteers for audiologists to practice cerumen removal techniques, as there was training going on at the convention.

And so we were sitting at a table, and an audiologist would come up, take a curette off the table and clean some wax out of my ear and then set the curette down. And then another audiologist came up and picked up that same curette -
SMAKA: No.

KEMP: Yep. And so at that point, I started asking questions such as, "What training do audiologists have on OSHA's blood borne pathogens regulations?" And I found that no one I spoke with even knew what that was.

With my microbiology background I had worked on some infectious disease products at Marion Labs and was well versed in blood borne pathogens regulations. And it clicked at that point that there was a need for a book on this subject for audiologists and that I should write it.

So I called Ross Roeser and said, "I'm going to write this thing and I really want you to edit it." And it ended up that Ross was a co-author along with Donice Pearson who wrote the chapters on speech-language pathology. The book was entitled Infection Control for the Professions of Audiology and Speech-Language Pathology.

And the book was very popular and I was asked to speak at meetings and conventions so I did a lot of traveling for the next few years speaking on infection control. And even though my lectures were informational and not commercial, this also happened to be good networking for Oaktree, since we supplied infection control products.

And professionals caught on very quickly that with Oaktree, you could get all sorts of products that you were already buying for their businesses from one place.

That was really the thing that accelerated the business to the next level.

SMAKA: Has infection control for audiologists changed since those early days?

KEMP: Interestingly enough, the Centers for Disease Control's (CDC) universal precautions, which are the basis of OSHA's blood borne pathogens regulations -have changed very little since they were first written. Universal precautions dictate appropriate behaviors for all patient care such as wearing gloves, cleaning, disinfecting, etc. None of that has changed dramatically.

Six to eight years ago, because of the re-emergence of tuberculosis, there were some additions to the original blood borne pathogens regulations that dealt with tuberculosis and the tuberculosis patient, particularly in hospital settings. But other than that, not much has changed.

Two significant things have happened on the product side of infection control. The first is that waterless hand de-germers like Purell became available. When they were first introduced, they were looked at skeptically by CDC and the Environmental Protection Agency (EPA) and even the Food and Drug Administration (FDA) for that matter. Initially, the thought was that soap and water should be used, when available, and hand de-germers should not replace hand washing with soap and water. Now, based on CDC recommendations, the waterless hand de-germers are actually preferred over soap and water, not because they're more effective but because they're more readily available. They have about the same effectiveness as soap and water, but they're easier to use and more readily available.

SMAKA: Interesting!

KEMP: Yes, I think that in the mind of CDC, the more people that can use these things, the better off we're all going to be. Waterless hand de-germers went from being a novelty to having widespread acceptance.

SMAKA: Yes, they are ubiquitous - at doctors' offices, gyms, and even the grocery. What was the other development on the product side of infection control?

KEMP: The other major change that has taken place has to do with cold sterilization. Cold sterilization was always frowned upon, largely because the active ingredient in the most common cold sterilizer was glutaraldehyde, which is a very dicey chemical. It's related to formaldehyde which is a known carcinogen. It's toxic, and bad for the environment.



Non-glutaraldehyde products are now available for cold sterilization.

About 6 years ago a non-glutaraldehyde product was introduced and approved for cold sterilization. It's based on a very high concentrate of hydrogen peroxide. Peroxide breaks down to water and oxygen, so it's safe for the environment, and much safer for the person using it than products containing glutaraldehyde. So because of that, cold sterilization has gained some momentum since there is now a chemical that's a little friendlier and a whole lot safer to use.

SMAKA: Where did the name Oaktree come from?

KEMP: The name comes from work that Ross Roeser was doing with Dr. Carl Crandall, who has since passed away. They both did considerable work in nursing homes, and saw the significant problems caused by the high prevalence of cerumen impaction in residents of nursing homes. Those problems included hearing loss caused by cerumen impaction, which would often have a sudden onset. As you can imagine, that can be upsetting and disorienting, especially to someone living in a nursing home. It can also cause communication problems, and mood changes such as irritability. Ross envisioned a program whereby audiologists would form a nationwide network to deal with this issue, which would be a great service to the people in nursing homes as well as a business opportunity for audiologists.

Although the program never developed, it was called Optimizing Adult Communication Through Regular Ear Examinations - OACTREE or OAKTREE as an acronym.

Although this sounds corny, I've also always loved the symbolism of a tiny acorn becoming a massively beautiful oak tree, and saw a parallel there with my business. So I really thought Oaktree was an appropriate name.

At first it was Oaktree Laboratories because of the fact that we were having the Audiologist Choice made specifically for us and I had come from this pharmaceutical background where everything was laboratories. But it quickly evolved into Oaktree Products.

SMAKA: Bob, what products from Oaktree do you feel are most significant in terms of what they bring to the market?

KEMP: A few products immediately come to mind.



The Lifetone HL™ Bedside Fire Alarm and Clock utilizes a 520 Hz square wave signal proven to be effective for waking people with hearing impairment

The first one is the Lifetone fire alarm. There is a dire need for this product, as studies show that residential smoke alarms do not wake most hearing impaired people, including those with milder degrees of hearing loss. It's complicated by the fact that often times the person with hearing loss may live alone. And, if someone has even had one or two alcoholic drinks they are even less likely to wake from an alarm. There are many factors at play and the data are shocking, so we are doing everything we can to make audiologists aware of it. A.U. is publishing a paper on the topic in Audiology Today, and as you know, presenting a seminar on AudiologyOnline later this month. Audiologists who are aware of this information have told us that consumers are very interested in knowing this. The Lifetone alarm emits a square wave signal and has some other features that make it more effective for waking people with hearing loss.

The second significant product that comes to mind are the newer, less expensive video otoscopes that are now available.

When video otoscopes were first introduced ten to fifteen years ago they were extremely expensive, on the order of $10,000 or so.

Over the last several years, there have been less expensive versions of video otoscopes available that weren't very good. Now, with the advent of LEDs, there are $1,200 video otoscopes that are really outstanding, and some for even less.



Less expensive, video otoscopes with good quality are now available

We carry one from Welch Allyn that has very good quality, and we've even got a $250 video otoscope that plugs into the USB port of your computer. While it's not comparable to a $4,000 model, for $250 it provides a really good view of the ear canal.

SMAKA: I want one to use with students - what a convenient teaching tool!

KEMP: When we show this to professionals, they're like, "Did you say $250!?" It's a great wow factor when people realize that this kind of quality is now available at this price.

SMAKA: What else is new or significant from a product perspective?

KEMP: With the introduction of the new deep-seated hearing aid, we're seeing audiologists and dispensing professionals interested in things that we would have never dreamed that they would be interested in, such as an operating ENT microscope. Or, a $2,000 pair of loupes with headlamps. You just wouldn't expect audiologists to be using those. And now that they're starting to invest in that type of equipment, they're realizing, "You know what? I could also use that for making an impression or cleaning an ear."

So the new deep-seated device has been a significant introduction to the market, not only for the product itself, but it has also impacted the peripheral items that go along with fitting it.

SMAKA: Bob, I have learned so much in this interview. How do professionals keep up with the latest products that could have an impact on their business and their patient care?

KEMP: Well, this year we are going to provide additional training through our AudiologyOnline classroom - quick overviews of new products, how to use them, how to market them, etc. Basically, this will be a really convenient way to keep up with all the cool things that are constantly coming out. It would be like walking through an exhibit hall, where you get to see new products and have the opportunity to talk to people that are familiar with them.

SMAKA: All right, one last question for you. Who is Sassy B. Kemp? You said your wife is Margy and your daughter is Katie.

KEMP: She's our King Charles Cavalier Spaniel and also our Director of Employee Satisfaction.

[Laughter]

KEMP: She's the sweetest thing in the world. She's a unique King Charles in that she's all ruby colored, not the typical red and white. She's also a runt, weighing only about 13 pounds, so she's in perpetual puppy mode. The days that I don't bring her to the office, everyone gets kind of depressed. I bring her in everyday because she's great for morale.



Sassy B. Kemp is Oaktree's Director of Employee Satisfaction

SMAKA: I can't wait to meet her;you may have to bring her to AudiologyNOW.

[Laughter]

SMAKA: Thanks a million Bob for all your time today. I learned a lot and enjoyed speaking with you.

KEMP: Thanks, Carolyn, I appreciate the opportunity.

More information about Oaktree Products, Inc. can be found by visiting www.oaktreeproducts.com or the Oaktree Products Web Channel on AudiologyOnline.